Guys I hate to be the one but this 100% will not work. The knuckles matching based on a picture does not tell the whole story. I'll try to outline off the top of my head the reasons this won't work:
Width of frame is different
Mounting points are totally different for lower control arms.
Diff drop is for a aam 8.25 not our diff. The 8.25 is a clamshell design and utilizes totally different mounting.
1500 uses different upper/ lower balljoints and tapers.
There is a write up somewhere where a 1500 wheel hub was temp used on an h3. I believe there was a difference in the center bore of wheels and also 12mm vs 14mm wheel studs. The torsion bar version of the 1500/ avalanche kit did not utilizes a steering rack so I am not sure if the crossmember would clearance our rack.
You would be better off just buying the right kit or working from scratch
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So let's answer your concerns:
1) I know it's wider - it's pretty easy to subtract material, a bit harder to stretch it - as for mounting points - again, not a huge deal since you have a great template in the original piece on the Hummer.
2) Rancho is the problem we're working around, they won't sell just the knuckles - so necessity is the mother of this invention (and she's still a whore)
3) the issue with the torsion bar is non existent because I'll use the H3 lower arms.
4) Ball joints, admittedly, is an issue; but it runs dead into another problem I'm already working on solving (non-changeable, non-lube-able ball joints)
This isn't complicated - it's simply dropping everything roughly 2 1/2" from stock. Not moving the upper control arms and rack makes this a better deal
That spindle looks like it maintains the same steering attachment point as stock (so the spindle moves down, the lower control arm moves down, but the rack stays in the same spot and the upper control arm stays in the same spot.
I disagree about working from scratch - I don't have the computer system to figure out the relative dynamic and static loads on the knuckle, but I am adept at mimicking the factory set ups....
Thanks, though, it does give me food for thought... especially the one you didn't mention. The Avalanche doesn't move down the differential, it simply puts spacers behind the CV.... we can't do that on an H3.